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1 – 10 of 265Jinhoo Kim and SooCheong (Shawn) Jang
This study aims to compare the risk‐return characteristics and performance of real estate investment trust (REIT) hotel companies (hotel REITs hereafter) with those of…
Abstract
Purpose
This study aims to compare the risk‐return characteristics and performance of real estate investment trust (REIT) hotel companies (hotel REITs hereafter) with those of C‐corporation hotel companies (hotel C‐corps hereafter).
Design/methodology/approach
The risk‐return characteristics and performance of hotel REITs and C‐corps were examined by estimating single‐factor and Fama‐French three‐factor asset pricing models for each portfolio. Differences between the hotel REIT and C‐corp estimations were tested using Wald test statistics.
Findings
Little evidence was found that hotel REITs have significantly different risk‐return characteristics and performance than hotel C‐corps, which suggests that hotel REITs and C‐corps are not significantly different in terms of market risk‐return characteristics and performance. The market portfolio had a significantly positive effect on the returns of both hotel REITs and C‐corps. The size and book‐to‐market factors of common stock also had a significant explanatory power for the returns of hotel REITs and C‐corps. Both hotel REITs and C‐corps performed similarly to the market portfolio, on a risk‐adjusted basis, during the 2000s.
Research limitations/implications
Despite the fact that the three‐factor asset pricing model explains a significantly greater proportion of the variation in the hotel firms' returns than the single‐factor asset pricing model, approximately 30 percent of the total variation still remains unexplained.
Practical implications
The risk‐return characteristics and performance of hotel REITs and C‐corps revealed by this study will render hotel investors' decisions between the two organizational structures less complicated. In addition, the findings can be used by portfolio managers to construct a well‐diversified portfolio.
Originality/value
A multifactor asset pricing model was used for the first time in this article to examine the risk‐return characteristics and performance of hotel companies. In addition, the importance of understanding differences between REIT and C‐corp structures in the lodging industry is emphasized.
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The purpose of this paper is to test for the presence of bubbles in the US lodging/hotel real estate investment trust (REIT) subsector from 1994 to 2016. It also compares the…
Abstract
Purpose
The purpose of this paper is to test for the presence of bubbles in the US lodging/hotel real estate investment trust (REIT) subsector from 1994 to 2016. It also compares the profitability of a buy-and-hold strategy with several technical trading rules when applied to lodging REITs.
Design/methodology/approach
To investigate speculative bubbles, the sequential right-sided unit root tests of Phillips, Shi and Yu (2015a, b) are used.
Findings
The results confirm the possibility of the existence of multiple bubbles and explosive behavior in prices and the price-dividend ratio. One of the detected bubbles coincides with the financial economic crisis of 2008 using both measures. In addition, several technical rules are found to be superior to a naïve buy-and-hold strategy even after adjusting for risk.
Practical implications
These findings will be of interest to policy makers, who can use such models as an early alert to take anticipative action to avoid bursting of bubbles and consequent negative effects on the economy. The findings also provide important information to investors attempting to devise trading rules that utilize the signals from bubble detection, as well as to hotel executives devising policies aimed at reducing risk and creating more firm value to maximize shareholder wealth. Moreover, valuation and bubbles are important to lenders and creditors who use assets as collaterals for financing hotel REITs.
Originality/value
Hotels are a unique hybrid of retail and housing that combine operating business with real estate. This paper is the first to investigate speculative bubbles in lodging REITs.
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The purpose of this study is to analyze the extent to which under- and over-investment problems affect hotel firms’ value around the time when acquisitions are announced.
Abstract
Purpose
The purpose of this study is to analyze the extent to which under- and over-investment problems affect hotel firms’ value around the time when acquisitions are announced.
Design/methodology/approach
Hotel firms are classified based on their financial constraints (under-investment), corporate governance mechanisms (over-investment) and organizational structures. Multivariate analyses are conducted utilizing the panel ordinary least squares regression to examine the effects of financial constraints, corporate governance mechanisms and organizational structures on acquisition returns.
Findings
The results show that financial constraints have a larger effect on the firm value compared to the effect of corporate governance. Also, acquisitions are viewed as over-investments in poorly governed, franchising and hotel-real estate investment trust (REIT) firms.
Research limitations/implications
The analyses are limited to gains from acquisitions in the hotel industry. Therefore, future studies may examine the effects of capital expenditures and cash holdings on hotel firm value.
Practical implications
Acquisitions could help financially constrained firms reduce informational asymmetries. Firms could expand through franchising when they are financially constrained. However, franchising firms should take restrictive actions to control managers from making acquisitions. The hotel-REIT organizational form does not seem to cause under-investment problems, and it functions as an additional corporate governance mechanism.
Originality/value
In addition to the C-corporation organizational structure, hotel firms extensively adopt REIT and expand through franchising, which might affect under- and over-investment problems. Nonetheless, little is known about whether capital investments create or reduce value for hotel firms. This study helps to explain how financial constraints, corporate governance mechanisms and organizational structures affect hotel firms’ value.
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This study examined the dynamic role of the Japanese property sector, particularly the real estate investment trusts (REITs), in mixed-asset portfolios of stocks and bonds, as…
Abstract
Purpose
This study examined the dynamic role of the Japanese property sector, particularly the real estate investment trusts (REITs), in mixed-asset portfolios of stocks and bonds, as well as office, retail, hotel and residential REITs.
Design/methodology/approach
Daily data were retrieved from 01 January 2008 to 31 December 2019. The sample time frame consisted of in-sample and out-of-sample periods. The dynamic conditional correlation-generalised autoregressive conditional heteroskedastic (DCC-GJRGARCH) model was deployed to obtain the forecast estimates of time-varying volatility of REITs and correlations with other assets. The estimates were employed to construct out-of-sample portfolios based on the three assets for daily investment. The five sets of portfolios with each individual property sector REITs, as well as a portfolio of stocks and bonds that served as a benchmark, were produced. The average utility for each set of portfolios was estimated and compared with the average utility of the benchmark portfolio. The average transaction cost (TC) for portfolio rebalancing was calculated as well.
Findings
The forecast of volatility estimates for each property sector revealed that each asset displayed a similar pattern with the differences in the volatility magnitude. Notably, hotel and retail REITs were more volatile than other property sector REITs. The property sector REITs exhibited a positive correlation with stocks but negatively linked with bonds. The results unveiled the diversification benefits of incorporating property sector REITs. The portfolio with property sector REITs had higher risk-adjusted returns and utility, compared to portfolio consisting of stocks and bonds. The benefits outweighed the TC for portfolio rebalancing.
Practical implications
This study highlights the importance of quantifying the conditional time-varying volatility and correlations of the property sector REITs with other asset returns, especially for investment decision, to select and include property sector REITs in mixed-asset portfolios. For fund managers seeking liquid assets in daily investment, this analysis suggests the inclusion of hotel and retail REITs to enhance REITs' portfolio performance.
Originality/value
This study is the first to investigate the dynamic characteristics of the volatility and correlation of each property sector REITs with other financial assets by employing the conditional framework that accounted for short- and long-run persistency in economic shocks. The reported outcomes shed light on the differences in the underlying properties that contribute to the variances in dynamic volatility of each sector REITs, as well as REITs' correlations with stocks and bonds. This application enables the authors to transmit the dynamics of variance-covariance matrix amongst each property sector REITs, stocks and bonds into asset allocation problem on a daily basis.
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Pawan Jain, Spenser J. Robinson, Arjun J. Singh and Mark Sunderman
The purpose of this paper is to examine market microstructure differences in stock market quality for hospitality real estate investment trusts (REITs) during the pre- and…
Abstract
Purpose
The purpose of this paper is to examine market microstructure differences in stock market quality for hospitality real estate investment trusts (REITs) during the pre- and post-financial crisis eras. It provides insight on different trading strategies based on the underlying liquidity and volatility of hospitality REITs as compared traditional REITs and the broader market.
Design/methodology/approach
The paper uses established microstructure measures for liquidity, trading volumes and risk assessment and compares daily and intraday trading patterns of REITs, hospitality REITs and the broad market.
Findings
The results suggest a quicker recovery of performance for hospitality REITs and some fundamental increases in liquidity measures post-crisis. The results of the study highlight the differences in trading volumes, liquidity and risk profile of hospitality REITs compared to traditional REITs both in the pre- and post-financial crisis periods.
Practical implications
The quicker recovery of hospitality REITs in key trading measures may suggest flight to quality during periods of high volatility.
Originality/value
This study fills the gap in the literature relative to microstructure studies and provides information to help hotel firms and portfolio managers choose an appropriate organizational structure and investment vehicle, respectively.
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The purpose of this paper is to empirically examine the effect on US stock, bond and real estate investment trust (REIT) prices triggered by the US Federal Reserve Chairman Ben…
Abstract
Purpose
The purpose of this paper is to empirically examine the effect on US stock, bond and real estate investment trust (REIT) prices triggered by the US Federal Reserve Chairman Ben Bernanke’s announcement of a possible intent to unwind, or taper, quantitative easing (QE). In particular, the author assessed whether the effect of the “Taper Tantrum” was fundamental or financial on financial markets.
Design/methodology/approach
The methodology used to determine whether the effect of the “Taper Tantrum” was fundamental or purely financial is that suggested by French and Roll (1986) as extended by Tuluca et al. (2003). The analysis is based on daily data for large cap stocks, small cap stocks, long-term bonds and REITs for 18 months before Ben Bernanke’s announcement and for 18 months after the announcement.
Findings
The results show that the “Taper Tantrum” had a fundamental, rather than a financial effect on all asset classes, especially so for REITs.
Practical implications
The author also found that in the post-taper period following Ben Bernanke’s announcement the correlation of REITs with stocks decreased compared with pre-taper period, whereas the correlation of REITS with bonds increased substantially. In other words, the “Taper Tantrum” had a profound effect on the risk/return benefits of including REITs in the US mixed-asset portfolio.
Originality/value
This is the first paper to examine the effect of the “Taper Tantrum” on REITs.
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Henry Tsai, Steve Pan and Jinsoo Lee
The purpose of this paper is to review and synthesize published contemporary hospitality financial management research from 1998 through 2009 and provide future research…
Abstract
Purpose
The purpose of this paper is to review and synthesize published contemporary hospitality financial management research from 1998 through 2009 and provide future research directions.
Design/methodology/approach
The authors began their initial literature search by entering into the ABI/INFORM database via ProQuest 19 pre‐identified keywords (i.e. debt, financing, ownership) related to the major functions of financial management, namely investing, financing, and dividend decisions, as well as commonly indexed keywords in hospitality finance research. The paper then expanded the authors' literature list through the reference lists of the studies that they initially identified. The authors limited their search to published studies between 1998 and 2009 and within hospitality journals written in English.
Findings
The paper identifies 98 published papers that represented the major work and efforts in expanding the body of knowledge in both the theoretical and practical perspectives of hospitality financial management. The major categories of papers include hospitality financing, investing, dividend policy, financial condition, and performance. Areas that warrant further investigation are noted throughout the paper.
Research limitations/implications
The papers review provides academics and practitioners an overview of the updated body of knowledge in the field and suggests the need for further in‐depth research to extend the literature and prompt better financial decision making for practitioners.
Originality/value
Since Harris and Brown's and Atkinson and Jones's reviews of past hospitality accounting and finance studies which mostly focused on the former, hospitality financial management research alone has grown noticeably in terms of diverse topics and sophistication of methodologies. To the authors' knowledge, no updated reviews that focus solely on hospitality finance research have been published in the last 12 years, and the need for such a task motivated them to conduct a review of recent research on this topic.
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Graeme Newell and Ross Seabrook
Given the stature of international tourism, hotel properties are an important property investment sector. The purpose of this paper is to assess the importance of a range of…
Abstract
Purpose
Given the stature of international tourism, hotel properties are an important property investment sector. The purpose of this paper is to assess the importance of a range of financial, location, economic, diversification and relationship factors in influencing hotel investment decision making.
Design/methodology/approach
This paper reports the findings of a survey of major hotel investors and hotel owners/operators in Australia regarding the factors influencing hotel investment decision‐making. The AHP multi‐criteria decision‐making methodology is used to assess the weights attached to each of the 30 factors influencing hotel investment decision‐making.
Findings
The main factors influencing hotel investment decision making were financial (weight of 37.0 per cent) and location (29.9 per cent) factors. These were followed by economic (14.5 per cent), diversification (12.0 per cent) and relationship (6.6 per cent) factors. This sees three levels of importance in the factors influencing hotel investment decision making. Differences were also found between the priorities for hotel investors and hotel owners/operators.
Originality/value
Only limited research is available concerning the hotel sector. This paper rigorously assesses the hotel investment process and assists hotel investors in prioritising the significance of 30 key factors and sub‐factors in hotel investment decision‐making.
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This article addresses strategies used by creditors to take control of businesses in bankruptcy. The creditors are able to convert their debt to equity ownership by acquiring a…
Abstract
This article addresses strategies used by creditors to take control of businesses in bankruptcy. The creditors are able to convert their debt to equity ownership by acquiring a significant amount of the companies’ outstanding debt and then controlling the bankruptcy process. The article provides an example of this process. Further, the risks concomitant with the debt acquisition strategy are discussed.
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